Optimism for the year ahead lifted Egypt's stock market on Monday, while Gulf bourses were mixed in muted trade as many investors were still away on holidays.

Egypt's benchmark index rose 1.6 per cent as some investors took new positions in the tentative hope of equity gains this year after the market slumped by almost half in 2011.

'It's extremely quiet but I think we are still building on some of the positive momentum of Thursday's session with fund managers adding some stocks to their portfolios,' said Mohamed Radwan, head of equities at Pharos Securities.

'Some market participants might be betting on a rebound this year.'

Commercial International Bank climbed 1.9 per cent, Citadel Capital added 2.8 per cent and Talaat Moustafa  gained 1.7 per cent.

UAE markets halted a two-session rally, with investors finding little reason to add risk.

Abu Dhabi's benchmark slipped 0.2 and Dubai's index  dipped 0.9 per cent.

Aldar Properties ended 2.2 per cent higher, up for a third session, and accounted for over half of all shares traded.

The government bailed out Aldar last week with a $4.6 billion lifeline, buying assets and retiring a loan.

'UAE is perhaps the only market with a lack of positive catalyst compared to its peers,' said Amer Khan, fund manager at Shuaa Asset Management.

'The only exception is event-driven trading like what happened to Aldar but apart from that, there would be precious little reason to attract foreign investors.'

Dubai's Emaar Properties shed 2.7 per cent and Dubai Islamic Bank fell 1 per cent. In Saudi Arabia, the benchmark climbed 0.2 per cent, trading higher in three of last five sessions.

Heavyweight Saudi Basic Industries Corp (Sabic)  gained 0.5 per cent and Saudi Cement rose 1.4 per cent.

Rabigh Refining and Petrochemical Company ended 0.4 per cent higher, after saying production units at its refining and petrochemical complex completed a reliability test.

'Banks, construction and petrochemical stocks are the best option available for investors right now compared to other markets inside or outside our region,' said Tarek Al Mady, a Riyadh-based independent financial analyst.

In Qatar, the index edged up 0.08 per cent. Heavyweight Qatar National Bank gained 0.7 per cent and Industries Qatar rose 1.1 per cent.

United Development ended 6.8 per cent lower, down for a second session after saying last week it was in talks to issue 80 million new shares to a state pension fund.

In Oman, stocks expected to post strong 2011 earnings helped lift the index by 0.1 percent, up for a fourth session.

Al Jazeira Services ended 6 per cent higher and Oman Emirates Investment Holding closed 5.3 per cent up. Oman National Investment climbed 4.7 per cent.

'There is strong buying on expectations for dividend yield and Q4 earnings mainly from traders and local asset managers,' said Adel Nasr, United Securities brokerage manager.-Reuters